BBC over-75s licence fee impact rising to £745m

Following Government confirmation that the BBC has agreed to take on responsibility for funding the over-75s licence fee concession, further details have been published following the presentation of Chancellor of the Exchequer George Osbourne’s Budget. Treasury estimates suggest a benefit to the Exchequer of £200 million from 2018-19, rising to £745 million

This will be phased in from 2018-19, with the full liability being met by the BBC from 2020-21.

The BBC will absorb this cost from within its licence fee revenue. The measure will be phased in from 2018-19, with the full liability being met by the BBC from 2020-21.

The cost base is the caseload and forecast expenditure on BBC licences for individuals over 75 years of age. The cost base is estimated using the Office of Budget Responsbility (OBR) expenditure forecasts, including the assumption that the cost of a TV licence is increased in line with CPI from 2017-18 onwards.

This an OBR assumption about movements in licence fees from 2017-18.

The costing is estimated by multiplying the forecast cost of the licence fee with the number of eligible households. This assumes growth in the number of eligible households as a result of demographic change and the assumed increase in licence fees. A small adjustment was made to reflect how the BBC will manage taking on the concession.